big tax refund question ?
the first time I filed my taxes I got a rather large tax refund-I had no idea what to expect so the refund caught me by surprise.
I'd bought a car a few months prior to when the first tax refund showed up so I just dumped the entire refund into my savings account-the down payment for my car took a rather large bite out of my savings so I used my tax refund to fatten it up again
big refund and smaller checks the whole year
or
bigger checks the whole year and smaller to no refund
what would you choose and why
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Answers & Comments
Having a big refund means you gave the government an interest free loan of your money for a year. People do this and think it is a big deal to get a big refund because they can't manage their money enough to have less taken out during the year and get a mall refund. I have just enough taken out so i don't pay in
I like a big windfall refund. I do not miss the money the rest of the year and I don't care about the miniscule interest I could earn on it.
A big refund means you gave the government an interest free loan. You can do better by having less withheld and putting the difference into a savings account yielding 0.01%.
Tax refunds are a way for people to force themselves to save. It depends on the amount of discipline you have, if you can save by yourself during the year. You should be spending less than 90% of what you earn.
I am retired. I have nothing withheld. I make my estimated payments. My refund is approximately want I want it to be. Last year it was 0. I have other things to spend my money on during the year than letting the government use it.
It is unfortunate how bad people are at managing money. This question should not exist. You have the minimum taken out keeping it legal, or maybe additional to buffer it. Get as close as you can to actual taxes, and write a small check in April of the next year. Withholding more than you have to is a no interest loan a worker is making to the US Government. Managing money includes setting aside as investing or saving for future needs even though most of America lives paycheck-to-paycheck.
That problem is not about taxes. It is about not earning a fair wage for the work performed and/or overspending on unnecessary things or extravagance and/or having dependents they cannot afford or an emergency huge expense such as medical or legal or natural disaster.
"Lacking discipline to save" or "indentured servitude" are the two most common.
Being surprised by a big refund is fun, the first time. Now, however, you're not talking about a "surprise," you're just talking about hiding money under the mattress until next April. In effect, you're considering loaning the government some of your money until April, and not getting any interest on that money in the meantime. The best choice is having the government loan some money to YOU without charging interest -- that is, planning for having to pay a small amount in taxes next April (instead of planning for a tax refund). Of course, you want to be sure that you will avoid penalties for under-withholding, so be sure at least 90% of the total tax is withheld from your paychecks during the year.
IMHO, the government makes a lousy piggy bank. Large refunds often get delayed--just when people really need the money.
My but you do ramble a lot.